Will the levy be the right lever

Announced in the Autumn Statement at the end of November, the Chancellor set out plans for the new Apprenticeship Levy which will mean a 0.5% contribution from employers with more than a wage bill of £3m annually. Hailed as a “huge reform to raise the skills of the nation and address one of the enduring weaknesses of the British economy”, the levy will be introduced in April 2017 and will raise £3bn by 2019-2020. The levy will be paid through PAYE contributions and will only affect 2% of employers.

The public sector and supply side seemed reasonably pleased with the announcement and the Association of Colleges Chief Executive, Martin Doel said the proposed levy was a “brave decision and an important step in ensuring the quality of apprenticeships is maintained at the same time as the quantity is increased”. Dr Mary Bousted, General secretary of the Association of Teachers and Lecturers, said, “George Osborne is right in his assessment that skills need a radical overhaul, so an Apprenticeship Levy on large employers is a good first step”.

The employer reaction however, has been wary and the Institute of Directors director-general Simon Walker said: “We are very concerned by the Government’s assumption that a quarter of the money collected will be spent on just administering the levy”. Carolyn Fairbairn, Director General of the Confederation of British Industry, described the levy as another “payroll tax” and the EEF, the manufacturers’ organisation said in a statement: “This cannot be a simple numbers game where businesses are clobbered to pay for apprenticeships”.

It is fair to say that the Apprenticeship Levy is a contentious move by the Chancellor and maybe because nothing else has significantly shifted the number apprenticeship places being offered by employers, it was a last resort, but it is high risk too and he must try and bring employers with him who are already feeling uneasy about the introduction of auto-enrolment and the living wage.

Some of that unease will also be about the quality of those apprenticeships after lots of fiddling and tweaking by successive Governments over the years which have done little more than devalue the brand, no more so that than the Coalition’s re-badging of the old Train to Gain scheme for over 25’s, cutting the funding and calling it an apprenticeship. The 12 week “apprenticeship” was also little more than a scandal delivered by private training companies with little prospect of any meaningful job at the end of it.

Some employers have not always covered themselves in glory either by using the apprentice scheme as little more than cheap labour and paying lip service to training and development.

Maybe there is an opportunity here and a line has been drawn, where the apprenticeship can once again be valued and esteemed. Schools need to play a part here too – their focus is still almost exclusively about getting kids ready for University and this needs re-calibrating. Being awarded an apprenticeship used to be a cause for celebration in families and those days may be gone forever, but there is a real chance here (maybe a last chance) with good levels of funding now being available and employers financially engaged, it could be high quality, well respected Apprenticeships are back for good and it is time to put to one side scepticism and do everything we can make sure this works.